WGU D215 Audit Final Exam 2025/2026 update|comprehensive
questions and verified answers (complete solutions) GRADE A+!!
Measures ability to cover current debt maturities and dividends with operating cash flow. -
correct answer Ability of cash flow from operations to cover current debt and dividends
An approximation of a monetary amount when a precise means of measurement is not
available. - correct answer Accounting estimate
Client's records of the initial accounting entry and supporting documents. - correct answer
Accounting records
Measures ability to meet short-term obligations with liquid assets such as cash, short-term
investments, and receivables. - correct answer Acid-test (quick) ratio
An electronic acknowledgement of a transaction by a supplier indicating goods shipped, prices,
and other information such as freight costs or taxes. - correct answer Advance shipping notice
(ASN)
The threat that a CPA will not act with objectivity because the CPA's interests are opposed to
the client's interests. - correct answer Adverse interest threat
Auditors state the financial statements are not fairly presented due to a pervasively material
departure from the applicable financial reporting framework. - correct answer Adverse opinion
The threat that a CPA will promote a client's interests or position to the point that his or her
objectivity or independence is compromised. - correct answer Advocacy threat
A measure of the uncertainty associated with not sampling the entire population. - correct
answer Allowance for sampling risk (ASR)
Evaluations of financial information through analysis of plausible relationships among both
financial and nonfinancial data; analytical procedures also encompass such investigation, as is
necessary, of identified fluctuations or relationships that are inconsistent with other relevant
information or that differ from expected values by a significant amount. - correct answer
Analytical procedures
Refers to the quality of audit evidence gathered. - correct answer Appropriate
Statements or representations, explicit or implied, made by management regarding the
recognition, measurement, presentation, and disclosure of items included in the financial
statements. - correct answer Assertions
Independent professional services that improve the quality of information, or its context, for
decision makers. - correct answer Assurance services
,Services performed when an independent practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party. - correct answer Attestation services
A sampling technique used to reach a conclusion about a population in terms of a rate
(frequency) of occurrence. - correct answer Attribute sampling
A committee of the board of directors responsible for oversight of internal controls, financial
reporting and disclosure in the financial statements, regulatory compliance, and the company's
independent auditors. - correct answer Audit committee
The science and art of discovering and analyzing patterns, identifying anomalies, and extracting
other useful information in data underlying or related to the subject matter of an audit through
analysis, modeling, and visualization for planning and performing the audit. - correct answer
Audit data analytics (ADA)
Information gathered by the auditor that is used when forming an opinion on the fair
presentation of a client's financial statements. - correct answer Audit evidence
A listing of details of the audit procedures to be used when testing controls, conducting
detailed substantive audit procedures, and completing the audit. - correct answer Audit
program
The risk that an auditor expresses an inappropriate audit opinion when the financial statements
are materially misstated. - correct answer Audit risk
The selection and evaluation of less than 100% of the population of audit relevance such that
the auditor expects the items selected (the sample) to be representative of the population and,
thus, likely to provide a reasonable basis for conclusions about the population. - correct answer
Audit sampling
Services by an independent CPA that provide financial statement users with (1) an opinion on
whether the financial statements are presented fairly, in all material respects, in accordance
with an applicable financial reporting framework and, in some cases, (2) an opinion on the
effectiveness of ICFR, which enhances the degree of confidence that intended users can place in
the financial statements. - correct answer Audit services
The determination of the amount of time spent testing the client's internal controls and
conducting detailed testing of transactions and account balances. - correct answer Audit
strategy
Correspondence sent directly by the auditors to their client's bank requesting information such
as cash held in the bank and details of any loans with the bank and interest rates charged. -
correct answer Bank confirmation
The amount of estimated misstatement in the population, even if no misstatements are
detected in the sample. - correct answer Basic precision (BP)
, An audit testing strategy that can be used to allow evidence obtained in prior audit periods to
support a conclusion about IT application controls in the current audit period. - correct answer
Benchmarking
An employee assists a vendor in winning a competitive bid for a contract; employee is
compensated, usually in the form of a cash payment. - correct answer Bid rigging
A customer is billed for goods, but goods are not shipped; accounting principles have very
narrow criteria for when revenue can be recognized for a bill-and-hold transaction; the
transaction must be initiated by the customer, and the customer must have a sound economic
reason for purchasing the goods and asking the seller to continue to hold the goods. - correct
answer Bill-and-hold transactions
A group that represents the shareholders and is responsible for ensuring the company is being
run to benefit the shareholders. - correct answer Board of directors
A bond trustee is usually a commercial bank or a trust company that is given fiduciary powers
by a bond issuer to enforce the terms of a bond indenture; the trustee sees that bond interest
payments are made as scheduled and protects the interests of the bondholders if the issuer
defaults. - correct answer Bond trustee
A binding agreement is not honored by one or more parties to a contract. - correct answer
Breach of contract
Shows cash flow capacity of a company for each common share issued. - correct answer Cash
earnings per share (CEPS) ratio
A sampling method that uses normal distribution theory to select a sample from a population
and evaluate the characteristics of a population based on the results of the sample. - correct
answer Classical variables sampling
A covered member's parents, nondependent children, brothers and sisters, or stepbrothers or
stepsisters. - correct answer Close relative
Processes used by a client when finalizing the accounts for an accounting period. - correct
answer Closing procedures
The process of discovering groups (termed clusters in data science) of similar items in a set of
data; items in the same group are similar, while items in different groups are not as similar. -
correct answer Cluster analysis
Law based on justice, reason, and common sense, rather than on absolute rules. - correct
answer Common law
A comparison of account balances to a single line item. - correct answer Common-size analysis
questions and verified answers (complete solutions) GRADE A+!!
Measures ability to cover current debt maturities and dividends with operating cash flow. -
correct answer Ability of cash flow from operations to cover current debt and dividends
An approximation of a monetary amount when a precise means of measurement is not
available. - correct answer Accounting estimate
Client's records of the initial accounting entry and supporting documents. - correct answer
Accounting records
Measures ability to meet short-term obligations with liquid assets such as cash, short-term
investments, and receivables. - correct answer Acid-test (quick) ratio
An electronic acknowledgement of a transaction by a supplier indicating goods shipped, prices,
and other information such as freight costs or taxes. - correct answer Advance shipping notice
(ASN)
The threat that a CPA will not act with objectivity because the CPA's interests are opposed to
the client's interests. - correct answer Adverse interest threat
Auditors state the financial statements are not fairly presented due to a pervasively material
departure from the applicable financial reporting framework. - correct answer Adverse opinion
The threat that a CPA will promote a client's interests or position to the point that his or her
objectivity or independence is compromised. - correct answer Advocacy threat
A measure of the uncertainty associated with not sampling the entire population. - correct
answer Allowance for sampling risk (ASR)
Evaluations of financial information through analysis of plausible relationships among both
financial and nonfinancial data; analytical procedures also encompass such investigation, as is
necessary, of identified fluctuations or relationships that are inconsistent with other relevant
information or that differ from expected values by a significant amount. - correct answer
Analytical procedures
Refers to the quality of audit evidence gathered. - correct answer Appropriate
Statements or representations, explicit or implied, made by management regarding the
recognition, measurement, presentation, and disclosure of items included in the financial
statements. - correct answer Assertions
Independent professional services that improve the quality of information, or its context, for
decision makers. - correct answer Assurance services
,Services performed when an independent practitioner, or CPA, is engaged to issue a report on
subject matter that is the responsibility of another party. - correct answer Attestation services
A sampling technique used to reach a conclusion about a population in terms of a rate
(frequency) of occurrence. - correct answer Attribute sampling
A committee of the board of directors responsible for oversight of internal controls, financial
reporting and disclosure in the financial statements, regulatory compliance, and the company's
independent auditors. - correct answer Audit committee
The science and art of discovering and analyzing patterns, identifying anomalies, and extracting
other useful information in data underlying or related to the subject matter of an audit through
analysis, modeling, and visualization for planning and performing the audit. - correct answer
Audit data analytics (ADA)
Information gathered by the auditor that is used when forming an opinion on the fair
presentation of a client's financial statements. - correct answer Audit evidence
A listing of details of the audit procedures to be used when testing controls, conducting
detailed substantive audit procedures, and completing the audit. - correct answer Audit
program
The risk that an auditor expresses an inappropriate audit opinion when the financial statements
are materially misstated. - correct answer Audit risk
The selection and evaluation of less than 100% of the population of audit relevance such that
the auditor expects the items selected (the sample) to be representative of the population and,
thus, likely to provide a reasonable basis for conclusions about the population. - correct answer
Audit sampling
Services by an independent CPA that provide financial statement users with (1) an opinion on
whether the financial statements are presented fairly, in all material respects, in accordance
with an applicable financial reporting framework and, in some cases, (2) an opinion on the
effectiveness of ICFR, which enhances the degree of confidence that intended users can place in
the financial statements. - correct answer Audit services
The determination of the amount of time spent testing the client's internal controls and
conducting detailed testing of transactions and account balances. - correct answer Audit
strategy
Correspondence sent directly by the auditors to their client's bank requesting information such
as cash held in the bank and details of any loans with the bank and interest rates charged. -
correct answer Bank confirmation
The amount of estimated misstatement in the population, even if no misstatements are
detected in the sample. - correct answer Basic precision (BP)
, An audit testing strategy that can be used to allow evidence obtained in prior audit periods to
support a conclusion about IT application controls in the current audit period. - correct answer
Benchmarking
An employee assists a vendor in winning a competitive bid for a contract; employee is
compensated, usually in the form of a cash payment. - correct answer Bid rigging
A customer is billed for goods, but goods are not shipped; accounting principles have very
narrow criteria for when revenue can be recognized for a bill-and-hold transaction; the
transaction must be initiated by the customer, and the customer must have a sound economic
reason for purchasing the goods and asking the seller to continue to hold the goods. - correct
answer Bill-and-hold transactions
A group that represents the shareholders and is responsible for ensuring the company is being
run to benefit the shareholders. - correct answer Board of directors
A bond trustee is usually a commercial bank or a trust company that is given fiduciary powers
by a bond issuer to enforce the terms of a bond indenture; the trustee sees that bond interest
payments are made as scheduled and protects the interests of the bondholders if the issuer
defaults. - correct answer Bond trustee
A binding agreement is not honored by one or more parties to a contract. - correct answer
Breach of contract
Shows cash flow capacity of a company for each common share issued. - correct answer Cash
earnings per share (CEPS) ratio
A sampling method that uses normal distribution theory to select a sample from a population
and evaluate the characteristics of a population based on the results of the sample. - correct
answer Classical variables sampling
A covered member's parents, nondependent children, brothers and sisters, or stepbrothers or
stepsisters. - correct answer Close relative
Processes used by a client when finalizing the accounts for an accounting period. - correct
answer Closing procedures
The process of discovering groups (termed clusters in data science) of similar items in a set of
data; items in the same group are similar, while items in different groups are not as similar. -
correct answer Cluster analysis
Law based on justice, reason, and common sense, rather than on absolute rules. - correct
answer Common law
A comparison of account balances to a single line item. - correct answer Common-size analysis
